You made a trust and with it a will, financial power of attorney and advanced health care directive. You may even have signed a deed and other supporting documents. Hopefully, your attorney spent considerable time with you going over the trust and explaining what to do next. As he or she was discussing the terms of the trust, your eyes may have glassed over and what you heard went in one ear and out the other. I’ve seen it hundreds of time. You go home and put your trust in your safe deposit box, a drawer, on the shelf or, as one of my client’s told me, in the freezer to protect the paper from a fire.
That client was right; your trust is only paper unless you do more to put the trust into action.
When I speak to clients I generally pull out a box and explain that a trust is a box where you put your assets and the paper is merely the instructions of what to do with the things in the box. But, first you must put the assets into the box. This is called funding the trust.
Why do you have to fund the trust? Because only you can give away, transfer or sell something that is in your name. For example, if you have a bank account in your name, when you die how does the money in your account get to the person you want to receive it if there is no designated beneficiary? Many people think they can take a will and death certificate to the bank and the bank will then issue a check based upon the language of the will. That is not the case. A will is an instruction to a court and the bank will require a court order to release the funds.
The same is true of your house or other real property. If title is in your name how will your heirs sell the property or take title if they don’t have the legal authority to sign a deed? Only with a court order.
This is why you did a trust in the first place; to avoid your heirs having to go to court. So, you must actually fund the trust by changing title to your property to the trust. Once it is titled in the trust and you die, then your successor trustee steps into your shoes and can transfer title as trustee of the trust.
How do you fund the trust? With real property, you transfer title with a deed. Your attorney probably prepared a deed and had it recorded. However, attorneys can’t go to the bank or other financial institution for you. So, you must take your trust (sometimes a Certificate or Affidavit of Trust is sufficient) to the financial institution and tell them you have a trust and you would like to transfer title of your accounts into the name of the trust. You may also need to change beneficiary designations on life insurance policies.
Exactly what assets should and should not be transferred varies from person to person and their particular situation. Therefore, you need to re-read the instructions your attorney provided when you signed your trust. If you still are unsure, call your attorney and check. It’s all part of the service!